By Liz Moyer and Janet H. Cho

Los Angeles continued to battle wildfires that have devastated communities, leading to 24 confirmed deaths in what California Gov. Gavin Newsom said Sunday could be the costliest natural disaster in U.S. history.

The death count from the fires rose to 24 from 16, officials said Sunday evening after more than 12,000 structures had burned across the region. About 150,000 residents are under evacuation orders, and about 64,000 Californians remain without power, according to PowerOutage.us. More than 14,000 firefighters, including firefighters from Mexico, continue to battle the blazes as fierce winds threatened to pick up once again.

Asked whether it will be the worst natural disaster in U.S. history, Newsom told NBC News on Sunday, "I think it will be in terms of just the costs associated with it, in terms of the scale and scope." Newsom added that officials are using cadaver dogs to search for victims, and the death toll is likely to rise "a lot more."

Estimates from AccuWeather put the economic cost of the fire at $135 billion to $150 billion, though that is preliminary and likely to change. Other analysts have estimated insured losses well into the billions of dollars.

Moody's Analytics on Friday wrote that "The scale and intensity of the Southern California wildfires, and their geographic footprint, suggest a staggering price tag in terms of the human cost and economic toll," noting that "the lost output associated with events so far will likely exceed that of any other U.S. fire by a sizable margin." Under the best-case scenario, the hit to economic activity would be $2 billion to $3 billion, "with the potential to climb significantly." The ultimate price tag from an economic standpoint could look like the destruction associated with major hurricanes.

Unlike previous wildfires that were concentrated in less densely populated areas, this time, more tightly packed areas in Los Angeles County and higher-end properties "are bearing the brunt, resulting in unprecedented destruction."

"Damage to homes and infrastructure will weigh heavily on productivity, and cancellations are already piling up, including the decision to move an NFL playoff game from Los Angeles to Arizona," Moody's Analytics said. The Los Angeles Rams will now face the Minnesota Vikings in State Farm Stadium in Arizona on Monday night instead of at SoFi Stadium in Inglewood, Calif.

Because median single-family home prices in Los Angeles and Ventura Counties are more than twice the national figures, with some far higher, "rebuilding costs will be steep."

Rebuilding will be challenging in an area already "notorious" for its scarcity of affordable housing because of California's strict zoning laws, higher prices for construction materials, appliances, and other products from aggressive tariffs, and construction worker shortages that will intensify under President-elect Donald Trump's tighter immigration policies, Moody's Analytics said.

Rising premiums will also take a toll on medium- to long-term price growth, and taxpayers statewide could be hit with a surcharge to fund the state's FAIR plan, which provides fire insurance coverage to those in high-risk areas who would otherwise not qualify.

Moody's Ratings has said it will take weeks or months to determine the magnitude of the insured damages, but that losses will be shared among standard homeowners insurers, insurers specializing in high-value excess and surplus lines (E&S) homeowners policies, the California FAIR Plan, and commercial property insurers. Major homeowners insurers have significantly raised rates in recent years in response to the higher costs of rebuilding and repairing homes and persistently high weather-related losses, and insurers including State Farm Mutual Insurance, Allstate Corp., and Farmers Insurance Exchange "pulled back or limited new business in California" in 2023 and early 2024.

Meanwhile, the FAIR Plan, "the insurer of last resort, has grown rapidly in recent years" among homeowners and businesses that can't obtain coverage in the private market, even though it is often more expensive and offers less coverage compared with the private market, Moody's Ratings wrote. Insurers still bear the costs of these policies, because the FAIR Plan is a syndicated fire insurance pool comprising property and casualty insurers licensed to write business in California, and "insurers are required to participate in the FAIR Plan losses in direct proportion to a company's market share." Pacific Palisades is the FAIR Plan's "fifth-highest wildfire exposure concentration, with about $5.9 billion of exposure."

Deanne Criswell, the administrator of the Federal Emergency Management Agency, told CNN on Sunday that powerful winds, which have helped spread the fires and vexed emergency efforts to contain them, are "potentially getting dangerous and strong again."

"I know that so many people probably want to get back into the area and check on their homes. But with the winds picking back up, it's just you never know which way they're going to go. And so they really need to pay attention, listen to what's going on, so they don't get in harm's way, and our firefighters can continue to do the great work that they have been doing to try to contain this fire," Criswell said.

Moody's Analytics said rising global temperatures have hastened climate change and increased vulnerability to wildfires in recent decades. "As drought conditions have become a new norm across the state in many parts of the West, fire season is essentially no longer a season but a year-round risk."

After receiving historically low rainfall during what is typically a wet season, leaving 60% of the county in severe drought, extreme winds sometimes reaching hurricane speeds "fanned the flames, exacerbating burn conditions in what was already a tinderbox," Moody's Analytics said.

Write to Liz Moyer at liz.moyer@barrons.com and Janet H. Cho at janet.cho@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 13, 2025 03:16 ET (08:16 GMT)

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